When it comes to trusts, it is very important to know the difference between a Scottsdale revocable trust and Scottsdale irrevocable trust. Not knowing the difference and getting one versus the other could cost huge legal and tax consequences.

Revocable Trust

A Scottsdale revocable trust, also known as a revocable living trust or living trust is a type of trust you are able to change at any time. This simply means that if at any time you decide that you want to change the terms and your beneficiary, you can do so by filling out a trust amendment. If by chance you decide that at any time you want to change the entire trust or revoke it all together, you can do this by filling out a trust amendment and restatement. Although choosing a Scottsdale revocable trust sounds like the best choice since it is so flexible, there is a downfall. The assets that are placed in your trust are still and will be considered your own assets for creditor and estate tax purposes. Meaning that your assets are not creditor protected and your assets after your time of death will subject to different taxes, such as state and federal, as well as state inheritance taxes.

Irrevocable Trust

A Scottsdale irrevocable trust is a type of trust that unlike a revocable trust, cannot be changed at any time once it is created. Irrevocable trusts are used to help with estate planning goals. A Scottsdale irrevocable trust, such as irrevocable life insurance trust, is used to accomplish those goals. For instance, the irrevocable life insurance trust, will remove the value of your property from the estate so that the property cannot be taxed after you die. This simply means that when you create a Scottsdale irrevocable trust and transfer assets into this trust, you are giving those assets to your beneficiary listed on the trust, this way you no longer own the assets and will no longer be taxed after you die.

 

When it comes to choosing a Scottsdale revocable trust or Scottsdale irrevocable trust, be sure you sit down and decide what it is you want to happen with your assets once you die. Determining what you would like to happen will also help you decide which trust is right for you.

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If you are not sure as to what legal document you currently have contact one of our professionals to help you with your planning needs. They will make sure you have all of your grounds covered and have the right legal documents that best suite your wants and needs.

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